Property Disrepair/Dilapidations

We asked Michael Watson, Head of Property Litigation, to tell us more about the subject of property disrepair and dilapidations.

What repairing obligations are typically included in a lease?

In addition to granting a tenant the right to occupy a property a lease will allocate between the landlord and the tenant various other obligations in relation to the property. These will include, amongst other things, the obligations to repair, decorate, clean and maintain mechanical and electrical systems.

The cost of complying with these obligations can be significant and therefore it is important that these risks are carefully managed. Tenants sometimes make the mistake of thinking that because a property was in a poor condition when they leased it they have to return it to the landlord in no worse condition. This can turn out to be an expensive mistake when they realise the extent of their liability to repair.

Both landlords and tenants should be aware of the extent of repairing obligations imposed by leases and should be proactive in the assessment and management of the risks associated with such obligations.

What actions can a landlord take if a tenant has not met their repairing obligations?

Where a tenant has failed to comply with their repairing obligations a landlord may bring a claim for damages at the expiry of the lease. Often termed "dilapidations" claims, these are claims for damages for breach of contract which are subject to the common law in relation to damages but complicated by the limitation on recoverable damages (imposed by Section 18 of the Landlord and Tenant Act 1927).

Of primary importance in pursuing, or defending, such claims are the terms of the agreement and therefore the first step should be a process of due diligence comprising a detailed review of the lease and associated documents such as licenses for alterations.

It is likely that additional expert input will be required in the form of an expert in the field of building surveying to prepare, or respond to, a schedule of dilapidations. Additional expert input may also be required in the form of reports from valuers, quantity surveyors and specialist mechanical and electrical engineers.

Often landlords and tenants faced with a dilapidations issue will seek initial advice from a surveyor but early input from specialist solicitors can be advantageous because ultimately dilapidations claims need to be conducted in accordance with the Civil Procedure Rules and the specific court pre-action protocol for such claims.

What actions can a landlord take during the term of the lease?

Repairing obligations in leases are not something that only fall to be considered at the expiry of a lease but they should be complied with throughout the term of the lease. A properly drafted lease should include provisions whereby a landlord can give notice to their tenant to require the tenant to repair the premises and in the event that they do not the landlord can undertake the works themselves and recover the cost from the tenant. As part of the process of managing the risk associated with owning properties landlords should be vigilant as to the condition of their properties and take action to ensure tenants are complying with the terms of the lease. The service of notices and then enforcement action requires careful planning and implementation but is something landlords should keep under review. Assuming property disrepair is something that can be addressed at the end of a lease is a high risk strategy – the tenant may become insolvent, leaving the landlord with a significant expense to repair the building for re-letting.

Get in touch

At Shulmans we are strong advocates of a proactive approach to the management of risks associated with owning and occupying property. For both landlords and tenants, the key to effective management of the risks related to dilapidations issues is working with a specialist professional adviser or solicitor. We have a team of specialist property dispute solicitors with substantial experience of advising both landlords and tenants on dilapidations claims, who will work with clients to identify and implement proactive strategies for the management of these risks.

You can read various articles that the team has published over the past few years. Join our Dilapidations Discussion Forum & Interest Group on LinkedIn for advice in this area of law.

Our team

Michael Watson

Partner

Head of Property Litigation

Direct Line +44 (0)113 297 1850

Helen Hill

Partner

Property Litigation

Direct Line +44 (0)113 297 3770

Richard Robinson

Associate

Property Litigation

Direct Line +44 (0)113 297 3783

Luke Maidens

Associate

Property Litigation

Direct Line +44 (0)113 297 8057

Paul Sagar

Solicitor

Property Litigation

Direct Line +44 (0)113 288 2816